A new study by Fenergo has revealed that 70% of financial institutions worldwide lost clients over the past year due to slow onboarding — the highest rate ever recorded.
The finding underscores growing inefficiencies in client lifecycle management (CLM) despite record investments in artificial intelligence (AI) and automation.
The global survey, which gathered insights from 600 senior executives across banks, asset managers and fund administrators, found that onboarding inefficiencies continue to plague the industry. The percentage of firms losing clients due to onboarding delays climbed from 67% in 2024 and 48% in 2023, while abandonment rates now average around 10%.
Fenergo’s 2024 Anti-Money Laundering (AML) fines analysis found that regulatory pressure remains intense. Global penalties reached $4.6bn in 2024, a slight decline from the $6.6bn total in 2023. However, North America accounted for an overwhelming 94% of these fines. The trend continued into 2025, with the first half of the year alone seeing $1.23bn in fines — a 417% increase compared with the first half of 2024. Much of this surge stemmed from sanctions-related enforcement actions.
Operational costs also continue to mount. The average annual spend on AML and Know Your Customer (KYC) operations has reached $72.9m per firm, with UK-based institutions reporting the highest costs at $78.4m. The US follows closely at $72.2m, while Singaporean firms report $68.2m.
The study found that while AI adoption in compliance is accelerating, the benefits are unevenly distributed. The use of advanced AI tools in AML and KYC operations jumped from 42% in 2024 to 82% in 2025, with Singaporean firms leading adoption at 92%, followed by the US (79%) and the UK (77%). However, manual work remains prevalent, with only a third of periodic KYC reviews automated on average.
Onboarding speeds vary significantly across regions. UK corporate banks reported the slowest onboarding times — often exceeding six weeks. Conversely, Singapore’s institutions onboard clients faster but still reported the highest rate of client loss due to inefficiencies, with 76% confirming this issue — a notable improvement from 87% in 2024. In the US, financial crime prevention remains the top AI investment priority for 65% of firms, though many continue to grapple with high operational costs and fragmented in-house systems.
The report also highlighted disparities between financial sectors. Commercial and corporate banks face the most significant onboarding challenges, while asset managers report better automation in periodic reviews. Asset servicers, however, endure the longest onboarding cycles and the highest client abandonment rates.
Fenergo director of strategic thought leadership and regulatory affairs Tracy Moore said, “Financial institutions are in an arms race to modernize compliance. The sheer cost of operations, averaging nearly USD 73 million per firm, coupled with record client abandonment rates shows that old approaches are no longer sustainable. To keep pace, firms need to embed intelligence into every layer of their client lifecycle: streamlining onboarding, scaling periodic reviews, and ensuring data is regulatory-ready at all times. To that end, AI has become the critical lever for resilience, efficiency and competitiveness.”
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